In a recent viral video, Ford’s CEO provides a raw and eye-opening explanation of why traditional auto manufacturers struggle to compete with companies like Tesla in the realm of software development. His insight not only sheds light on the automotive industry's impending transformation but also underlines a broader significance for the IT software industry. Let's dive into the intricacies of his revelation and understand the ramifications.
The source interview is actually a year old, and you can view it below, but it got viral just recently.
The Fragmented Software Infrastructure
"If I explain to, you know, the listeners how crazy our software system is and why it's so difficult for legacy car companies to get software right. You've. Well, I'll do it very quickly. Yeah."
Ford’s CEO begins by acknowledging the daunting complexity of the current software infrastructure within legacy car companies. To save roughly $500 per vehicle, Ford and others outsourced the development of various software modules to independent suppliers. This practice, while cost-effective in the short term, has resulted in a nightmarish tangle of fragmented systems.
The Realm of 150 Software Providers
"So Bosch would do the body control module, someone else would do the C control module, someone else do the engine control module. And we'd have about 150 of these modules of semiconductors all to the car. The problem is the software are all written by, you know, 150 different companies and they don't talk to each other."
Ford's vehicles essentially operate with software from 150 different companies, each responsible for a single module. The lack of a unified software ecosystem leads to compatibility issues and hampers the efficiency of vehicle operations. Each module operates in isolation, with its proprietary code, creating a "loose confederation of software providers."
The Struggle with Intellectual Property
"I actually have to go to Bosch to get permission to change their C control software. Right. So even if I had a high speed modem in the vehicle and, and I had the ability to write their software, it's actually their IP."
The reliance on external vendors means Ford has limited control over the software. Changing or updating any functionality requires permission from the respective suppliers. This bureaucratic process stifles innovation and agility, essential components for modern software-driven enterprises.
A Paradigm Shift – Insourcing Software
"That's why at Ford, we've decided the second generation product to completely in-source electric architecture. Right. To do that you need to write all the software yourself."
Realizing the critical drawbacks of their current model, Ford has embarked on a mission to in-source their electric vehicle's software architecture. This bold move involves rewriting all the operational software, a first in the company's history. While a herculean task, it's a necessary step to align with the more streamlined and efficient processes exemplified by Tesla.
Significance of This Shift for the IT Software Industry
The Burden of Outsourcing
The Ford CEO’s candid acknowledgment of the pitfalls of outsourcing critical software components sheds light on a broader issue within the IT industry. Depending heavily on external vendors leads to fragmented systems, creating long-term inefficiencies and dependencies that can stymie a company’s ability to innovate and react quickly.
For many IT firms, the lesson is clear: outsourcing may cut initial costs, but the complexity and inefficiencies it introduces can be detrimental in the long run. By reconsidering the balance between in-house development and outsourcing, companies can gain more control over their software, ensuring greater cohesiveness and adaptability.
The Necessity for Agility and Speed
Ford's struggle with rapid updates and innovation resonates deeply with the IT industry, where agility and speed are crucial. The cumbersome process of getting permissions from multiple vendors slows down the ability to deploy updates and respond to market changes—an issue that modern IT paradigms try to avoid.
This revelation underscores the increasing necessity for modular and microservices architectures in software development. Such architectures allow different parts of a system to be updated independently, enabling faster iterations and more agile responses to user needs and technological advancements.
The Cultural Shift Towards Software-Centricity
Perhaps the most profound takeaway is the cultural reorientation towards software-centricity that traditional companies must embrace. Ford's move to in-source all their software signals a monumental shift in recognizing software as a core component of their business, not just an add-on feature.
For the IT software industry, this is a clarion call for businesses across all sectors. Emphasizing software from the ground up means investing in software talent, fostering a culture of innovation, and prioritizing software in strategic planning. This approach isn't just about keeping up with Tesla; it's about adapting to an era where software increasingly defines competitive advantage and operational excellence.
Conclusion
The Ford CEO’s candid observation isn't just a wake-up call for legacy car makers but resonates across the broader landscape of the IT software industry. The transition from fragmented, outsourced systems to unified, in-house developed software is crucial for remaining competitive and innovative. This transformation underscores the dynamic interplay between software development and industry evolution, dictating the future course of technology and enterprise alike.
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